Microsoft announces layoffs amid weak earnings

The Microsoft layoff rumors turned out to be true, after all. Making its earnings announcement a bit earlier than anticipated, the company today revealed that it would immediately drop 1,400 employees, and might shed as many as 5,000 within the next 18 months, in response to the slowing economic activity and IT spending.

The cuts will come across a number of divisions, including the company’s research and development, marketing, sales, finance, legal, human resources and information technology departments. The move is expected to reduce Microsoft’s annual operating expense run rate by approximately $1.5 billion and reduce fiscal year 2009 capital expenditures by $700 million.

Microsoft also missed its earnings expectations for their fiscal second quarter, which ended on December 31. The software giant reported a 2 percent increase in revenue, drawing in over $16.6 billion, but also announced an 8 percent decline in operating income to $5.9 billion and net income dropped even further.